Liquidated damages under concession agreements are not consideration for taxable supply; GST not chargeable, reliance on Circular No.178/10/2022-GST

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....AAR held that liquidated damages paid by the applicant to the concessionaire under the concession agreement do not constitute consideration for a taxable supply and are not subject to GST; accordingly, the concessionaire is not entitled to avail input tax credit in respect of such receipts. The Authority applied Circular No.178/10/2022-GST reasoning that where damages merely compensate for loss without any express or implied agreement by the recipient to tolerate or perform acts for the payer, such payments are a monetary compensation flow and not taxable. AAR further noted CBIC clarification on penal charges as analogous, observing the charges enforce contractual discipline for breaches. No other questions required adjudication.....